This means Volkswagon has the comparative advantage in car parts. This means that when possible, Rolls Royce should specialize in the production of aircraft parts, since they have lower opportunity cost of producing them.
Which company has the comparative advantage in producing large tubes of toothpaste?
Which company has the comparative advantage in producing large tubes of toothpaste? Mmmmint– it produces the second most, but Fresh!
How do countries trade comparative advantage?
The theory of comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production. Comparative advantage suggests that countries will engage in trade with one another, exporting the goods that they have a relative advantage in.
What’s the difference between comparative and absolute advantage?
Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor. Comparative Advantage: The ability of an actor to produce a good or service for a lower opportunity cost than a competitor.
What manufacturing company has the comparative advantage for car parts? – Related Questions
Which calculation helps determine which producers has the absolute advantage?
When the total output is dived by the total resources used gives the absolute advantage or the productivity. The more productivity, the more the absolute advantage the producer has.
Is it possible for a country to have a comparative advantage in producing?
In economic terms, a country has a comparative advantage when it can produce at a lower opportunity cost than that of trade partners. While a country cannot have a comparative advantage in all goods and services, it can have an absolute advantage in producing all goods.
Which quality best describes a producer with an absolute advantage?
Absolute advantage is when a producer can provide a good or service in greater quantity for the same cost, or the same quantity at a lower cost, than its competitors.
Which best describes how specialized producers decrease their opportunity costs quizlet?
Which best describes how specialized producers decrease their opportunity costs? the amount the company receives from the sale of all of its computer parts.
Is it better for businesses to have opportunity costs as it often gives them a comparative advantage?
It is better for businesses to have opportunity costs, as it often gives them a comparative advantage. Which describes a way in which consumers most likely benefit from producers’ absolute advantage? Prices decrease as a result of increased production efficiencies.
When discussing comparative and absolute advantage which best describes?
Absolute advantage refers to the uncontested superiority of a country or business to produce a particular good better. Comparative advantage introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.
Which scenarios is the best example of an opportunity cost?
The correct answer is a. A computer company produces fewer laptops to meet tablet demand. Opportunity cost defines the benefit obtained by having a commodity after forgoing some other commodity. In the problem statement, the computer company incurs an opportunity cost of laptops for tablets.
What is comparative advantage discuss by giving an example?
Comparative advantage is what you do best while also giving up the least. For example, if you’re a great plumber and a great babysitter, your comparative advantage is plumbing.
What are 4 examples of opportunities?
What are some examples of opportunities?
- Get help on projects.
- Propose working groups.
- Get testers for new ideas or products.
- Create a team to work on an idea you have.
- Share your expertise or best practices in a particular field.
What is opportunity cost and give any 3 examples?
A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).
How does economic system help to solve economic issues and problems in an economy?
Economic systems solve these problems in several ways:” by custom and instinct; by command and centralized control (in planned economies) and in mixed economies that “uses both market signals and government directives to allocate goods and resources.” The latter is variously defined as an economic system blending
What are the importance of opportunity cost to an individual a firm and a government?
The concept of the opportunity cost underlines the basic economic problems of scarcity and choice, and is relevant to the behaviour of individuals or consumers, firm or producers and of the government.
What is opportunity cost and why is it an important concept in the capital budgeting process?
Opportunity costs represent the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can be easily overlooked.
What are sunk costs and opportunity costs discuss whether sunk costs and opportunity costs are relevant for capital budgeting?
Opportunity cost is the cost of a missed opportunity i.e.: the profit/gain foregone when choosing one business alternative over another. Sunk cost represents past costs that have already been incurred and cannot be recovered.
Can you explain how the opportunity cost of capital sets the standard for investment decisions?
Opportunity cost helps in choosing the right project when faced with a variety of alternatives. Here is how the decision is affected: Higher Opportunity Cost Lowers NPV: A higher opportunity cost implies a bigger discount rate. A bigger discount rate means that the future values are worth considerably less today.
Why sunk costs should not be included in a capital budgeting analysis but opportunity costs and externalities should be included?
Sunk costs should not be included in a capital budgeting analysis since sunk costs have already been incurred in the past and is unrecoverable no matter what options have been chosen. In other words, these are costs that are permanently lost, no matter what decisions would be made in the future.